The Variation of Terms in a Contract of Employment in Ireland
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The dynamic, long-term nature of a contract of employment means that the contract will constantly change. These changes, however, will have to be compliant with the rules regulating the alteration of contracts of employment. Technical legal difficulties may arise because alterations within the contract of employment do not comply with the requirements to the alteration of contractual rights.
Changes can be made in the terms and conditions of a contract of employment in one of a number of ways: (1) By variation supported by consideration; (2) where there is a specific clause in the contract permitting alteration of terms and conditions; (3) or (where this does not infringe the Unfair Dismissals Act, 1977-2007) by dismissal followed by re-engagement.
The conditions to lawful variation of a contract of employment
The two essential conditions to lawful variation of a contract of employment are: (a) consideration and (b) consent.
Acceptance
Acceptance must be deliberate. In Cowey v. Liberian Operators Ltd the employer wished to secure the employees consent to a reduction in the period of notice prior to dismissal, from three months to one month. The proposed change was inserted in an office memorandum which was passed around, and initialled by the staff, including the employee in question. The plaintiff, who had just been induced to join in a senior capacity, and had been promised a three months notice period, assumed the memorandum could not have been intended to refer to him, and that the proposal must have been intended to refer to junior employees such as short hand typists. It was held that the employees signature did not constitute meaningful consent.
Acceptance of the variation of a contract of employment may be implied through the employees continuing to remain in work without protest. However, implied acceptance will not be inferred in at least three circumstances.
(i) Experimental compliance with a variation does not either necessarily constitute consent. In Sheet Metal Components v. Plummeridge the employees worked in as toolmakers in the appellants factory in Darwin Close, Reading. However, as the respondents were closing down their business, it was decided that the employees should be asked to relocate to the employers parent companys premises in Cardiff Road, Reading, where terms were considerably inferior to those at Darwin Close. The employees agreed to the transfer, which was outside the terms of their contracts, reluctantly, and on a trial basis. The EAT (UK) declined to accept the employers argument that this was consent. The employee does not want to be out of a job. He goes with an open mind. There is a period when he is uncommitted. During that period he makes up his mind whether he will accept the new employment. Compliance during that experimental period does not constitute consent.
(ii) Acceptance will not be inferred where the employee remains in employment under continuous protest. In Hill v Peter Gorman Ltd the employer reduced by 10% the employees salary. The employee continued, however, to work under protest for the employer. The fact that the employee did not actually leave could not, the court held, generate a conclusion that the employee actually accepted a change in the terms and conditions.
I am of opinion that it cannot be said that an employee accepts an attempted variation simply by the fact of continuing in his employment. Where an employer attempts to vary the contractual terms, the position is this: he may accept the variation expressly or implicitly in which case there is a new contract. He may refuse to accept it and if the employer persists in the attempted variation the employee may treat this persistence as a breach of contract. An employer has no unilateral right to change a contract.
In Marriott v. Oxford Co-op Society the employer, who was trying to manage the effects of a recession, imposed a ÐЈ1 wage cut. The employee protested but remained in employment,, and the employer argued that by remaining in employment he had implicitly accepted the change. The Court of Appeal held that the employee’s temporary remaining in employment did not constitute acceptance:
He never agreed to the dictated terms. He protested against them. He submitted to them because he did not want to be out of employment. By insisting on new terms to which he never agreed, the respondent did, I think, terminate the old contract of employment.
On the other hand, continued working under the new regime without any protest may be regarded as implied acceptance.
(iii) A distinction may be made between cases where the variation of contract has immediate effect, and cases where the effect of the variation is not immediately apparent. In the first case, the absence of any response to the variation may be construed as acceptance. In the second case, the absence of protest may of no significance until the variation is actually implemented. In Jones v. Associated Tunnelling the employees’ terms and conditions of employment were, in the early 1970s, changed to include a nationwide mobility clause. However, it was not until 1980 that any move was made to actually apply the mobility clause, and the workers strongly objected. The employer’s argument that the employees were compromised by their continuing to work without objection was rejected in the following analysis:
In our view, to imply an agreement to vary, or to raise an estoppel against the employee on the grounds that he has not objected to a false record by the employers of the terms actually agreed, is a course which should be adopted with great caution. If the variation relates to a matter which has immediate practical application (e.g., rate of pay) and the employee continues to work without objection after effect has been given to the variation (e.g. his pay packet has been reduced) then obviously he may well be taken to have impliedly agreed. But where, as in the present case, the variation has no immediate, practical effect the position is not the same … it is asking too much of the ordinary employee to require him either to object to an erroneous statement of his terms of employment having no immediate practical impact on him or to be taken to have assented to the variation.
Consideration
The second condition to lawful variation of a contract is the supply of consideration in exchange for the other party granting variation. Variation involves a definite alteration